Greece is the new France

In the Washington Post, David Weigel mentions how Greece has become the new France - i.e. the new example held up by Republicans in their never-ending quest for bogymen. Before, we were all supposed to be terrified of turning out like France (I never quite understood the rationale there), and the Democrats were somehow supposed to be leading us in that direction. Now, I guess, it's Greece. But still the same old scare tactics, of course.

Nobel Prize-winning economist Paul Krugman, though, points out the critical error in their thinking:

Of course, the real rap on Greek fiscal policy is that the Greek government ran deficits even during the good years — not that it’s running deficits in a slump. And it’s true, we did something like that too. But guess who was in power then? Funny about that.

I've been wondering about this, too. Are we Americans really so ignorant that we can't see the difference?  Like Greece, America under George W. Bush - thanks to tax cuts for the rich along with increased spending (including starting two wars without paying for them) - had record-breaking deficits in good economic times. So when disaster struck - again thanks to Republican incompetence - we were in especially dire straits because we started out in a hole.

I don't intend to absolve Democrats of all blame, because they spinelessly went along with pretty much every inane proposal the Republicans pushed. Yet it was the Republicans who led us - for eight years in the White House and 12 years in Congress - so it's hard to deny their primary responsibility, don't you think?

At any rate, deficits aren't always bad. We learned that in the Great Depression, when the Democrats also had to get us out of a hole the Republicans dug. (I'll just point out that the Great Depression taught us the need to regulate our banking industry, too, before I get back to the topic here.) During economic panics, credit dries up and private spending drops, causing businesses to cut payrolls, which causes a further drop in spending, which causes businesses to cut employment even further, etc.

If it's bold enough, deficit-spending by the government can stop this downward spiral, as we've seen in the past year. Combined with stabilizing our banking industry, it can halt the collapse and let us start to grow again. Again, that's exactly what we've seen in the past year or so, since Barack Obama took office. It's not pretty, and it's not speedy - and employment always lags other indicators (such as stock market performance), but it does work.

Where you don't want deficit spending, though, is when times are good, economically. All that does is create asset bubbles (exactly as we saw happen during the Bush administration) and make the next downturn far worse (or, at least, harder to combat). Like America under the Republicans, Greece partied when times were good, apparently thinking that the good times would never end. And so now they're in big, big trouble.

Again, Greece is not in trouble for running deficits now, after the collapse. They're in trouble for running deficits when times were good. If Republicans really want to compare America to Greece, they'll be pointing directly at themselves. Of course, they're counting on us Americans being too ignorant, and with very, very short memories - and on Fox "News" to eagerly encourage both. Sadly, that might actually work.

But in a democracy, we get the kind of government we deserve. If we're dumb enough, ignorant enough, or apathetic enough to give the GOP another chance at destroying our country, I guess we deserve that, huh? But I don't deserve that! Do you?